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TMI Blog2017 (1) TMI 1397X X X X Extracts X X X X X X X X Extracts X X X X ..... h JSWERL, the assessee had no connection with that entity, that expenditure was claimed by that company and was disallowed by the AO of that company while completing the assessment for the AY.s 2008-09 and 2009-10,that the AO had wrongly disallowed the expenditure in the hands of the assessee. Thus, there was no justification for making any addition in the case of the assessee - Decided in favour of assessee Disallowance, made u/s.14A - Held that:- We find that the assessee had not earned any exempt income for the year under consideration, that it had made the disallowance of ₹ 13.59 lakhs on its own, while filing the return of income, that the AO had made for the disallowance under the heads interest expenditure and administrative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition made on account of capitalisation of ₹ 68.15 lakhs in respect of contract awarded to Gremach Infrastructure Equipments and Projects Ltd.(GIEPL).The AO observed that during the AY.2008-09,the assessee had claimed to have engaged the services of GEIPL for exhibiting part of its projects, that it had been held during that year that no work had been done by GEIPL in respect of the contract awarded, that no work could be executed, that the payment made by the assessee could not be considered for purpose of business, that capital expenditure of ₹ 68.15 lakhs claimed by the assessee for the year under consideration could not be allowed. 3.Aggrieved by the order of the AO, the assessee preferred an appeal before the First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the material before us. We find that the assessee had not claimed the expenditure in question in its books of accounts for the year under appeal. For disallowing any expense, the AO should first prove the incurring and claiming of the said expenditure in the regular books of accounts. But, without establishing the basic fact that the assessee had claimed the expenditure, the AO had made the disallowance. The expenditure was incurred by an erstwhile entity namely JSWERL and certain discrepancies were noticed about the transaction. So, if any disallowance was to be made, it should have been in the hands of that assessee or it should have been in the case of successor of JSWERL. The FAA has given a categorical finding of fact that before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferring to the details applied Rule 8D that satisfaction of the AO is to the incorrect claim made by the assessee in this regard was precondition for invoking the applicability of rule 8D.The assessee made a reference to certain case-laws and argued that the direct interest expenses incurred by the assessee had already been disallowed by the assessee in its return of income, that no further interest disallowance could be made on account of any other indirect interest expenditure. After considering the assessment order and the submissions of the assessee, the FAA held that the arguments advanced by it regarding to non-applicability of section 14 A read with rule 8D on the ground of strategic investment in subsidiaries were advanced in appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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